Re: [OT] Microsoft's teeny punishment by the EU
On March 23, 2004 14:14, Hugo Vanwoerkom wrote:
> Number Six wrote:
> > Even though I still have a bunch of stock, and I'm a linux lover
> > now, so I cheer if it goes up and I cheer if it goes down, I was
> > expecting Europe to really nail Microsoft to the wall. I dunno, I
> > expected some surrogate America-bashing, or just a really f-you to
> > an American company. Even though it's a record for the EU, it's a
> > pittance to Microsoft and will be barely noticed.
> >
> > What happened? Do they just have not much power? Why so light?
>
> Indeed, and the Commission has the power to fine them 35 billion...
> Like it says here:
>
>
> March 23, 2004
>
>
> Antitrust Fine for Microsoft Said to Be $613 Million
>
> *By PAUL MELLER*
>
> RUSSELS, March 22 - Antitrust regulators will fine Microsoft
> 497 million euros ($613 million) on Wednesday, when the European
> Commission formally rules that the company abused its monopoly in
> computer operating systems, people close to the company said on
> Monday.
>
> The fine, which was set late last week after settlement talks with
> Microsoft broke down, was endorsed by regulators from the 15 member
> nations of the European Union on Monday.
>
> Microsoft said the fine was too big. "In view of the absence of a
> clear legal standard under E.U. law, a fine of this size isn't
> warranted," said Tom Brookes, the company's spokesman in Brussels.
>
> On Tuesday, the fine is to be discussed by senior aides to all 20
> commissioners before being brought up at the European Commission's
> final meeting on the case on Wednesday morning.
>
> Microsoft would then be officially informed of the fine and sent a
> summary of the ruling by fax, shortly before Mario Monti, the
> competition commissioner, holds a news conference to announce the
> decision.
>
> Under the European Union antitrust laws, the commission can set a
> fine of as much as 10 percent of a company's global sales, which in
> Microsoft's case would be more than $35 billion. European antitrust
> regulators, however, have never fined a company the full 10 percent,
> and Brussels-based lawyers and officials had expected the fine
> against Microsoft to range from 100 million euros to 1 billion euros.
>
> The biggest previous fine imposed by the commission was 462 million
> euros, or about $406 million at the exchange rate at that time,
> against Roche of Switzerland in 2001 for its role in several cartels
> that fixed prices and market shares of vitamin products in the
> 1990's. (Seven other vitamin makers were fined lesser amounts.)
>
> Still, some people close to Microsoft had been speculating over the
> weekend that the commission would not impose a fine at all.
>
> But Amelia Torres, a spokeswoman for Mr. Monti, said: "We have
> already told Microsoft many times that a negative ruling will incur a
> fine. A small company could claim it didn't know the rules, but not
> one the size of Microsoft."
>
> The commission is expected to rule that Microsoft abused the monopoly
> position of its Windows operating system in two ways. By withholding
> vital information about Windows from rival makers of software for
> servers, the company gained an unfair advantage in the separate
> market for server software. It also competed unfairly by including
> its Media Player audio-video software as part of Windows. The
> commission is expected to announce remedies to restore competition in
> these markets, requiring Microsoft to sell two versions of Windows to
> PC makers in Europe, one of them with Media Player stripped out.
>
> It would also have to share more Windows code to allow rival makers
> of server software to compete with Microsoft more fairly, according
> to people close to the case. Computer servers drive networks of PC's.
>
> These remedies would have more of an impact on Microsoft than a fine,
> because the company has more than $50 billion in cash reserves and
> has already set some of that aside for covering legal costs.
>
> After negotiations toward a settlement of the charges collapsed last
> week, Brad Smith, the chief lawyer for Microsoft, said the company
> would appeal any ruling at the European Court of First Instance in
> Luxembourg.
>
>
> Copyright 2004
> York Times Company <http://www.nytco.com/>
You slipped a decimal point. Microsoft's global sales are about US$ 35
bn per annum, hence the maximum possible fine would be about US$ 3.5
bn. The grammar of the sentence in the NYT article is ambiguous; big
though MS is, it does not have annual sales of US$ 350 bn.
Even if the Commission legally has the power to levy a fine based on a
company's global sales, to do so on a major global multinational with
headquarters outside the EU would be politically risky.
Opinions may differ, but a fine of about 2% of annual worldwide sales,
about 6% of sales within the EU and of over 1% of MS's current reserves
is, in my view, not to be sneezed at. Remember that these percentages
are of sales, not of profits. Even taking into account MS's high profit
margins, profits do not equal sales.
--
Bruce Miller
Ottawa, ON K1M 2H9 CANADA
GPG key ID 0x1B9200FC. Public key available from keyservers
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